Realizing business benefits through CRM


Many companies are in the early stages of implementing customer relationship management (CRM). Although CRM promises increased revenues, profits, and customer service, companies face potential failure because of the complex technical and organizational issues involved. Our research on CRM, and six company experiences in particular, illustrate three CRM “targets” that companies aim for: implement a single or a few applications, create a strong infrastructure to support CRM, or use CRM to transform the organization. These targets have very different impacts and different challenges. They differ on both costs and benefits; sponsorship varies; each suggests a different evolution for a CRM effort; prepare to get your hands dirty in cleaning the data; ensure that the architecture will scale; and you can (sometimes!) teach old dogs new tricks.
Managing Customer Relationships Used to Be Easier

Managing customer relationships was easier in earlier times. Merchants knew their customers – the members of their households, what they generally bought, their likely future purchases, and their current and potential value as customers. This knowledge helped merchants create highly effective customer relationships. However, that close understanding of customers eroded as
people became more mobile, cities grew, companies became larger, and marketing reach expanded. This development was unfortunate for customers and companies alike. 
Today, many companies are trying to go back to “the good old days” of knowing their customers well by capturing the available wealth of internal and external data, analyzing that data to better understand customer needs, preferences, and profitability, and then leveraging that knowledge in every customer contact. Recent studies show that the movement to customer relationship management (CRM) is gaining momentum. 
Based on our research over the past four years, we have found three important CRM targets:
• Applications – Individual CRM applications that deliver business value
• Infrastructure – A data, software, and hardware infrastructure that supports
CRM applications and will also support future applications
• Transformation – An organizational transformation made possible through comprehensive CRM efforts.
Though any CRM effort must ultimately address all three targets to some degree, companies often put special emphasis on one. In fact, by studying CRM efforts that predominantly focused on a single target, we were able to better understand the challenges in addressing each.
Although CRM is on the rise and holds tremendous promise for building mutually beneficial relationships with customers, many companies are struggling with their CRM efforts. We believe companies can minimize their risks of failure by first having a clear vision for their CRM target – application, infrastructure, or transformation – and then understanding and addressing the issues typically associated with it.

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